Today, early in the morning in Asia, Block Inc. CEO Jack Dorsey unveiled the company's most recent strategy. Dorsey announced that it plans to use the dollar-cost averaging (DCA) technique to buy Bitcoin (BTC) on a monthly basis.
Block's dedication to incorporating Bitcoin into its financial plan is demonstrated by this action. It also highlights Dorsey's status as a well-known "Bitcoin maximalist."
Block's Bitcoin DCA Strategy Details Are Revealed
Regardless of how much an asset's price fluctuates, the same dollar amount is invested in it on a regular basis using the dollar-cost averaging method of investing. This technique lessens the effect of volatility on the purchase as a whole.
Therefore, businesses like Block that own Bitcoin can use DCA to proactively manage the volatile nature of Bitcoin. This strategy also has the potential to eventually result in a lower average cost per share.
In its official statement, Block gave more information about how they plan to put the DCA approach into practice. 10% of the company's gross income from Bitcoin-related items would go into monthly Bitcoin purchases, according to the announcement.
"We intend to buy Bitcoin on a monthly cadence under the DCA scheme, beginning in April 2024. Compared to 2020 and 2021, we will execute these over a shorter time frame because of lower notional trade values and better Bitcoin liquidity. We have opted to buy Bitcoin during a two-hour window that has historically had the highest level of liquidity in order to minimize slippage," the company said.
Block has always had a portfolio focused on Bitcoin. When the corporation bought 4,709 Bitcoins in October 2020 at an average price of $10,618 each, it made news.
In February 2021, 3,318 Bitcoin were added at a significantly greater price of $51,236 per. These were further investments. The balance sheet of the corporation showed that Block owned 8,038 BTC as of March 31, 2024.
These initial expenditures have turned out to be profitable. Block stated that within the same reporting period, their initial $233 million investment in Bitcoin had increased 146% to roughly $573 million. During the first quarter of 2024, its net income was boosted by the remeasurement gain from its $233 million Bitcoin investment.
More than just acquisitions, Block's role in the Bitcoin ecosystem has changed dramatically. A new function for Square users is called "Bitcoin Conversions."
This innovation increases the usefulness of Block's services in the cryptocurrency industry by enabling retailers to convert a percentage of their revenues straight into Bitcoin. The reasoning for this strategic move was recently provided by Jack Dorsey in a letter to investors.
"We think there should be an open protocol for money, one that is not owned or controlled by any entity. It allows us to serve more people worldwide more quickly," said Dorsey.
May 2024, Cryptoniteuae